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Nurserymen's files Chapter 11

Executives say it's business as usual as Pearlstein family loses equity

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Posted: Wednesday, May 25, 2011 3:45 pm | Updated: 4:22 pm, Wed May 25, 2011.

Nurserymen's Exchange Inc., for years one of Half Moon Bay's largest employers, announced on Monday that it has filed Chapter 11 bankruptcy. Company Chief Executive Jack Pearlstein said he has spoken with prospective buyers and expects business as usual for employees and customers alike.

The family-owned company had grown from the bathtub of Pearlstein's late parents, Carl and Virginia, to be counted among the country's largest floricultural concerns, doing business across the globe. Now an international cast of creditors is lining up to be repaid for obligations the company is no longer able to meet.

The company blames the global recession and an evolving industry for its change in fortune. In documents filed with federal district court in San Francisco, the company states, "Beginning in 2008, (Nurserymen's Exchange) faced challenges resulting from a declining economy and industry overcapacity, which spurred the need to implement aggressive restructuring initiatives."

Increasingly, flowers and shrubs, the core of Nurserymen's business, are grown in other countries, where labor and energy are less expensive. That has left a business - which at one time employed more than 3 percent of Half Moon Bay's residents - reeling. It currently employs 165, and some employees it laid off in recent years have been pushing to unionize the sprawling Coastside facilities on the north end of Half Moon Bay.

Monday the company said the Salinas regional office of the California Agricultural Labor Relations Board has petitioned the statewide board to dismiss an election petition from the United Farm Workers of America labor union. The latest turn concerns whether the company was at 50 percent of peak employment at the time of a vote by the company's current and laid-off employees that indicated support for union representation. Whether the statewide board will act on that recommendation is unknown.

Pearlstein, who grew up in the business, points to July 1, 2010, as the worst day of his professional life. That is the day the company gave layoff notices to 135 employees.

"It wasn't until three or four years ago that we got shook like everyone else," Pearlstein said in an interview Monday. "I would say my biggest mistake was not cutting sooner."

Pearlstein said that his main focus now is maintaining jobs for a workforce that he considers part of his extended family. His sister, nephew and other family members continue to work for the company.

While investors could restore the family's financial stake in Nurserymen's, Pearlstein acknowledged, "It is very likely the family won't own it."

Court documents specify the company be sold within 60 days. An auction is set to occur on July 13. Creditors have until July 22 to file claims with the court.

The company claims assets worth $34.8 million, as of April 30. That includes 11 parcels, totaling 475 acres, worth an estimated $17 million. Outstanding debts include nearly $15.5 million owed to Wells Fargo and another nearly $10 million to secured and unsecured creditors.

Pearlstein said the company is now profitable.

"... Our results for the fiscal year ending June 30 indicate that we are completing this business turnaround: We achieved sales in excess of projections with most core crops selling out in all major holidays," he said in a separate prepared release. The release said the company had achieved positive adjusted earnings and realized $10 million in savings.

Company executives say they are also selling a 28-acre swath of land zoned for residential development to an unnamed Bay Area company.

The land sale would put the company in a better position to pay creditors and company counsel Don Mendel said the land, which had once been used as a driving range, had long been considered a strategic asset.

Since 1985, the company has been paying an assessment that would allow for 79 sewer connections if the land were ever developed. Those rights are now transferable to the new owner, Mendel said.

 

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